The US Dollar is losing some ground despite a risk-off atmosphere. What levels should we eye? Here are views from UOB:
Here is their view, courtesy of eFXdata:
EUR/USD: Neutral (since 21 Aug 18, 1.1485): EUR is caught in a consolidation range for now.
There is not much to add as EUR closed little changed in NY last Friday (1.1376, +0.01%). While the underlying tone has strengthened somewhat, we continue to hold the view that EUR is “caught in a consolidation range for now” and is likely to trade sideways. That said, in view of the lackluster price actions over the past several days, a 1.1300/1.1440 range is likely enough to contain EUR for the next oneweek or so (from a wider 1.1265/1.1440 range expected previously). Looking further ahead, a clear break of 1.1440 would suggest EUR is ready to tackle last month’s top near 1.1500.
GBP/USD: Neutral (since 21 Aug 18, spot at 1.2795): GBP to trade sideways to lower in the coming days. No change in view.
There is not much to add to the update from Wednesday (05 Dec, spot at 1.2720). After the recent bout of volatile price action, the outlook for GBP is mixed even though we detect a slightly weak underlying tone. All in, GBP is expected to continue to trade sideways to lower in the coming days, likely within a broad 1.2600/1.2850 range.
AUD/USD: Neutral (since 13 Sep 18, spot at 0.7170): AUD is still under pressure but a break of 0.7130 would come as a surprise.
There is not much to add to last Friday’s (07 Dec, spot at 0.7230) update. As highlighted, AUD is not out of the woods yet and a dip to 0.7160 is not ruled out. That said, after the weak daily closing on Friday (NY close of 0.7197, -0.52%), the probability of a break of 0.7160 has increased (we previously ascribed a low probability for a break of 0.7160). However, the sharp decline in AUD from last week’s 0.7394 peak is running ahead of itself and a breach of the next support at 0.7130 would come as a surprise. All in, AUD is expected to stay under pressure unless it can reclaim the 0.7270 ‘key resistance’ (level was at 0.7300 last Friday).
NZD/USD: Neutral (since 07 Dec 18, 0.6880): NZD has moved into a consolidation phase.
We just shifted from a bullish to neutral stance last Friday and there is no change to the view. As highlighted, NZD has moved into a consolidation phase even though the near-term bias is tilted to the downside but for now, any weakness is considered as part of a 0.6820/0.6930 consolidation range. That said, after the weak daily closing last Friday (NY close of 0.6861, – 0.29%), a dip below 0.6820 is not ruled out but the next support at 0.6790 is unlikely to yield so easily.
USD/JPY: Neutral (since 09 Oct 18, 113.10): USD could probe the next support at 112.00. No change in view.
We highlighted yesterday (06 Dec, spot at 113.00), “despite the rebound in USD, we continue to see scope for USD to test the November’s low of 112.29″. USD subsequently dropped to 112.21 but the decline was brief and not sustained (USD rebounded quickly to close at 112.66 in NY). Downward momentum has eased with the recovery but it is too soon to expect a short-term bottom at 112.21. Unless USD can move above 113.40 within these 1 to 2 days, a probe of the next support at 112.00 would not be surprising. However, in view of the patchy momentum, a sustained move below this level seems unlikely.
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